Batman: Year Three tells multiple intertwining stories. Beginning not long after the death of Jason Todd, the second Robin, Alfred Pennyworth has contacted Dick Grayson, the original Robin and currently working as Nightwing, to inform him that Batman is becoming increasingly erratic and violent in his vigilante work.

Synopsis

The Batman's most recent case involves the murder of a number of high level crime bosses. He's received a tip on the next murder, which turns out to be right, but he is unable to prevent it.

While he's out, Alfred goes to the Gotham Court House where he makes a case to the parole board that Anthony Zucco deserves to stay imprisoned. He recounts his childhood abuses, his time in St. Jude's Orphanage before telling the board that the true reason Zucco must stay where he is is for the living victims, telling them of the murder of Dick Grayson's parents and how it traumatized the young boy, begging them to keep him in prison as he has for the past ten years.

Grayson arrives at an empty Wayne Manor, disturbed to find everything related to Jason Todd removed from the Batcave, and changes into his Nightwing costume to find Batman. Following his trail, he gets the same information the Batman got, through horrific beatings, by asking questions instead. He finds the Batman, who refuses to talk to him, in a recently exploded building.

Zucco's pending release upsets Alfred, who has just arrived at Wayne Manor, and he reminisces about Dick first arriving at the Manor, Bruce letting him in on his Batman secret, and training him to become Robin. When Batman and Nightwing arrive and interrupt him. Batman, still refusing to speak to anyone, Nightwing and Alfred discuss his irrational behavior and violence, leading to Grayson to recall receiving his first Robin costume and going on his first mission to attack a Zucco front company.

As he decides to confront Bruce once and for all, he enters the study to find he has disappeared. Nightwing leaves to look for him again, leaving Alfred to consider hunting down and kill Zucco on his own, only to change his mind, deciding there must be another way.

Searching Gotham for Batman again, Nightwing stops at the most recent gang leader murder to do forensics work, which makes him remember Batman teaching him how when he was younger. At the same time, Batman confronts the surviving gangsters who mention Zucco when they are asked about any long missing families. The mention brings back a flood of flood of memories. They tell him about the diary Zucco has supposedly kept since he was younger that details all of Gotham's biggest crimes and the actions of it's most notable criminals that he has used to blackmail them all. Finding out that he's being released, the Batman takes the gang leaders to break in to the apartment of one of Zucco's underlings, Dexter, to force information out of him.

Grayson takes a fingerprint lifted at the crime scene back to the Batcave and, running it through the Batcomputer, finds a suspect whom he begins to trace back. As he does so, Alfred stops him to finally tell him Zucco is being released. The news comes as a shock and he drives directly to the prison, where he finds Batman already waiting. They watch and wait, while inside Zucco and Taft,the parole board member he blackmailed into voting for his release, argue about getting the blackmailing parts of the book. Just as Zucco walks out of the prison, he's cut down by a hail of bullets. Nightwing accuses Batman of knowing it was going to happen, which he denies, before gruffly leaving.

Back in the Batcave, they listen to a press conference during which Taft mentions Zucco's diary. Batman suspects he's making it public knowledge so that all criminals will seek it, making it more likely someone will find it and turn it over to him. After he refuses to allow Nightwing to accompany him when he goes to check some theories, Alfred says that Bruce is afraid what happened to Jason could happen again, and what it would do to him. Recalling the trial allowing Bruce to take him in, Grayson says their childhoods were different because he grew up with love, while Bruce grew up much more alone.

Batman, meanwhile, has gotten into a bar brawl to find Dexter, who has no new information to give, only Zucco's old joke about "his beginning being [their] end". He makes a stop at a bar Zucco's guys used to hang out at, where another gangster is killing people to get information on the diary. Batman demands that not only they stop hunting for the book, but they spread the word to others that it's off limits.

When Nightwing goes to Drexel's he receives the same information without the violence. After he leaves Drexel is confronted by Taft wielding a gun. It dawns on him almost immediately what Zucco's "beginning" must be and he goes to St. Jude's Orphanage--scheduled to be demolished the next week--and finds the book in the bell tower. Taft, who followed him, attacks him and they fight, with Taft explaining that he wants the book so he can take over Zucco's position in the city as revenge for all of the criminal activities he was blackmailed to commit. Batman arrives behind them, fearing he's going to die in the same way Jason did, but when he arrives he discovers him throwing the book off the tower into the rain.

Batman later tells Alfred that the few pages recovered were washed clean by the rain, but the bulk of them were blown away by the rain. Dick, meanwhile, has made his first visit to his parents graves in a long time.